Boeing Debuts Entrant in $40 Billion Tanker Competition

Boeing will offer the KC-767 Advanced Tanker for the U.S. Air Force's $40 billion aerial refueling tanker competition, the company said on Monday.

The aircraft will be a derivative of the future 767-200 Long Range Freighter and will be produced at Boeing facilities in Everett, Wash., Boeing said.

Plan of Attack

Discussing the U.S. Air Force's final terms of a deal with Boeing, with Jane Wells, CNBC Business News

Northrop Grummanand its Franco-German partner EADSare competing as a team. That alliance plans to offer a variant of EADS' Airbus A330 dubbed the KC-30.

Australia has ordered the Airbus tanker and Britain has picked EADS as the preferred bidder in its competition.

The 767 has been modified into a refueling tanker for Italy and Japan.

The Air Force said it would consider both the value and capabilities of the bids, and a higher-priced bidder could win if its overall approach outweighed the cost. The Airbus A330 sells on the commercial market for about $160 million. Boeing's 767-200 sells for about $120 million.

The Air Force hopes to select a winner later this year.

Several U.S. government agencies found that an Air Force tanker program begun in 2001 was riddled with problems. In 2004, Congress killed a proposal for the military to lease and buy 100 Boeing 767 tankers.

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